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tv   Mad Money  CNBC  June 5, 2013 6:00pm-7:01pm EDT

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a 114 exit if it goats the wrong way. >> volatility index spreads. i am a seller. a trade dan got me into. >> it worked. i'm going to read that trade. my mission is simple, to make you money. i'm here to level the playingç field for all investors. there's always a bull market somewhere and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i just want fewer days like food. my job is not just to entertain you, educate you, teach you, so you understand days like this call 93 at 1-800-743-cnbc. what the heck kicked off the market these days here?
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what is going on here? is it housing? is that why the dow plummeted, nasdaq tumbled 1.27%? >> the house of pain! >> let's talk about housing. because that's starting at the very beginning. like do, re, me in the "sound of music," it's a great place to start. it is, indeed, at the full kroum uu full crum of what is crashing this market. first let's be clear, housing is the industry that ben bernanke and the federal reserve chief has been targeting for growth the whole time he's been buying back bonds. it's like the qe3 we always talk about. why? because first, housing, much has its weight in the economy. housing is dependent uponç mortgage rates. bernanke until last week has been able to keep rates down so housing stays hot. this decline is about bernanke
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losing that battle or perhaps saying he no longer needs to keep them down because things are so much better than they were. think for a moment about all the good the improved housing market is. when your house is more valuable, home depot tells us you will spend three times the value. the homeowner spends about $1,000 in a year, the homeowner spends $3,000. that's huge for companies and suppliers, sherwin williams, pacific masko. i can't tell you how many depend on walmart and lowe's and sears. they have a lot to gain. no wonder they have all been pulverized. they are hideously relentless in their downturns. we know the banks have been taking a loss, bad months become good ones. more good loans means the banks need fewer reserves. if the government relends,
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dividends, buybacks, that's why they got crushed today. it's going in the wrong direction. when your house increases in value, call it the wealth effect. you will be able to spend more. which is in general you will be able save more, which it could be good news for the stockmarket. that's what weç thought of had been happening, the data of late says that might not be the case. if housing does better, though, you get a virtuous circle going. if it goes higher, people feel wealthier and still higher stock values. it feeds on itself. we had built way too many homes in this country a few years ago, now we have so much demand that we worked off most of that image. we haven't built that many in the last four years. we worked off the inventory held by banks. we actually got a developing housing shortage in this country. something the giant nationwide home builder told us this very morning when we interviewed him
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on "squawk on the street." you know when you build and sell a home, you employ many more people than the actual buildersment new homes mean new orders for supplies winding, plumbing, insulation, plumbing, landscaping. more road building, more jobs for lawyers, inspectors, title people, sales people so many others. that's all unquestionable good. so what the heck is the problem here? i'll tell you the problem. it's all about, well it's all being threatened, all that great news right now being threatened because the magic elixir that made this housing market revival possible the lowest mortgage rates at least in our livetime are coming to an end. that's now çunquestionable. and they're coming to an enbus housing has come back too far too fast, which is driving bonds down if price and therefore up in yield, therefore driving your mortgage rate higher or the initial rate you might pay much higher. just think about it. this whole move in stocks pretty
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much came to an end last week, last week in may. we got an index that showed a 10% increase in the price of homes. it's been hideous ever since. for some of the people that run the federal reserve. that was a sign, a sign tear job is over t. fed is finished. it's done. it has caused a significant rally in using. there is no need to do any more. hey, from now on, it's self sustaining. other people who owned bonds decided to sell them before they went down. no one wants to take a loss. meantime the interest rates moved up so far, we seen a number in refinance and mortgage rates. rates have gone up so much that demand, initial demand is dropping. you get demand dropping, then all of those good things i talked about, all the things that go right when housing goes up will start going in reverse. yeah, instead of you get this, the house of pain the greatest story ever told the return of hougz is thought to be over.
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even though stewart miller of leonard saider with are in the earlyinings, good reason, only we will build a million homes, probably half asç many as we need. why build these houses if interest rates are going to spike and people can't afford to buy them anymore? a legitimate question. home sales will be cut back. those still under water on their mortgages, there are 7 to 10 million that lose help, the homes gets throttled back. the virtuous circle up, morphs into a vicious cycle down as we saw today. buy, buy, buy, sell, sell, sell. you know what? that's fine if there is something to take housings place or if housing were to be the spark and the fire would catch on elsewhere. what, what, what? we got no commercial construction to speak of. look out your window. we have endless government job losses, which are only
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accelerati accelerating. with this question. we have dwindling infrasfrur, all federal, state and local have cut their budgets. we have nothing out of washington, no new interstate highway system like ike came up in '56/'57. no new pipe lines, our best hope from millions of jobs to be created in the next few years for sure. look, autos, they have been making a comeback. i got bad news there, many of our jobs are going to mexico, nafta allows imports would impunity no matter how manyç solid jobs are crunched. you take the housing away, you take away a lot of what was driving the stockmarkets higher. the other parts, the bond market equivalent, utility, higher yielding investment trust, they get crushed as you will see later in the show. why why be in those stocks that have such huge price risk and you go back to bonds now they
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yield more. that's the thinking of the market in general. is it any wonder the market is going lower when so many components are going do worse, not better, if interest rates don't stabilize or come back down? i don't think so. i don't leak the market. i don't like it. you see, the selling makes sense, especially given that nobody ever got hurt taking a profit, hence, i always encourage you to ring the register rather than be a greedy pay. bears make money. bums make money, pick, here's the bottom line. sure, it's only housing that could be slowing, sure it's only one relatively giant piece of the u.s. economy. hey, who cares? but housing has been the driver of so much that's good out there. you take it away with nothing taking its place. you know what happens? take a look at your stock screen. take a look at that ticker underneath you right now. take a look at the closing prices of the indices. right. yeah, that's what happens. frank in iowa. frank. >> hey, jim, we need to know about lulu lemon and this whole
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pants thing. i'mç looking for your prognosi on short term, medium term and long term for the stock. >> the stock was run in anticipation of what will be a better quarter. wren they run up, oftentimes they go down. i would say you need refoul, let the stock come in before they report, then it can go higher. right now it is almosted for perfection in ap market that is nothing but perfect. mitch if florida. >> caller: jim, i appreciate everything you do for us. a quick question, toyota, i've had great gains the last couple of month, today's news of the recall, i look at it as an opportunity to sfach up more shares. what do you think? >> i agree with you that toyota is a terrific stock. i do worry about the japanese market t. yen has got to go. we got to make it so the yen has a great advantage over the dollar, meaning toyota's trucks and cars will be cheaper. i agree with you, i think toyota
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represents great value. i'm not worriedant that remember. josh in texas, please. >> caller: boo-yah, jim. >> how are you? >> caller: good, thank you. i want to talk about pandora and how low it will go with the apple news radio in the game. >> i don't want to go against a wounded apple. can be like a wounded tiger. we know those are the most dangerous, pandora, which is doing quite quell çwell, does have a business that can be replicated if have you moiven to replicate it. apple has tons of money. out of house and home? when housing has been a driver good in this market. it has been. it slows down, we get days like today. i like to use the company and say that doesn't make any sense, but it does, "mad money" we'll be right back. coming up, outcare. athena health allows people to save cash by plugging into cloud computing, but the stock was brought back to earth after its
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recent earnings report. is this pullback a profitable tonne in the find out in cramer's exclusive. and later, prime time? from real estate to utility, the stocks that had been a haven for dividend investors have been getting hit by fed concerns. the recent pullback pay have you eyeing a buy. but before you make your move, find out what cramer has been eyeing in tonight's edition of "off the charts," all coming up on "mad money."
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among the rubble, stocks that have been already crushed, stocks where the expectations are now low enough that they can be beaten going forward. take athena health. it's a cloud company with a software platform. their stock does a better job of managing the business side of tear practices. kai the na provides electronic health records, the big business known as revenue cycle management where athena handles the billing and accounts receivable of doctors business, getting reimbursed by medicare and medicaid can be a complicated healthsome. they come in with faster and less mistakes. this is a fast growing company that invests the bulk of its money into its growing business. it has a high flying stock. when it reported a month ago, they were less than perfect having fewer doctors than expected. it folded from $95 to $86 in a
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day. it climbed today to into.93. management gave mixed guidance for the full year partly because of the recent addition of a mobile software to checkç for drug interactions for particular medications. it might not be as lucrative as it thought, the company says the new doctor numbers will get better and this last quarter was a blip. the stock deserves to be bought down here. so let's check in with jonathan bush who is a terrific co-founder and creator of tremendous wealth for share olders, find out more how his company is doing, where it is at, welcome book to "mad money." >> hello, cramer, you are amazing how you talk. thank you for having me. >> let's get right to it. i picked up today the $2.7 -- >> middle of the new york times, right? sorry. >> this is about the colonoscopy, the divergent prices around the country. what is athena health doing to
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stop this? >> first of all, you have to look at my talks and figure out in the new york times is pulling my phone records. it's as big a problem as how much it costs is that there is no shopping in health care. people don't have theable to know how much -- the ability to know how much they can cost and they don't have the money to choose the cheaper one. up with of the thing athena is doing with its newest service athena collarty is helping doctors form a new aco under the obama çprogram, you can get moy by the government for saving money on a population of patients. to do that, you got to know how much everybody costs and how much they utilize before you decide where to refer a patient. the fact that the times and cms guys are just discovering that price is actually a feature in total cost is a little embarrassing. anyway, now we're all on the same paige and a network that
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connects to everybody is going to be increasingly valuable, i hope. >> let me understand because our people at home have to know this. this is the kind of obscenity of some guys charging so much more than others that your company is trying to remedy? >> we are trying to get our guys to know, our doctors and hospitals to choose us to know when they refer who is the most expensive, who is the most effective so that if they're at risk for how much that patient cost, they're going to end up saving money, not losing money. >> how do you make money dog that? >> we ask for a piece of the savings. i'm a pieceful man. i want a piece of the collections and a piece of the savings and a piece of the risk. >> they kold call it the cold .45 a peace-maker, here's what i want to know, last quarter was a difficult quarter to understand. i don't think it was the slowdown, i want you to talk pe through some of the worries people had through the acquisition you and i talked about and i think is terrific.
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if your own quarter, you talked about a skisç him -- skis him schism and a fault line. i have been worked out with he pock crits. >> we love hypocates. we love the kinks. we knew it would a fight mayor, the fact that they would be paid in advance for their revenue means we have to discount revenue, 18 though we're getting it full on. that was a weird thing how we expressed the revenue. the fact is we flushed any questionable business out. we don't need it. we have such a bright future with hypocrates. we want it to sell clean stuff. i'm not at all concerned about the fact that we took a hit to get if there and do it right. we are also spending a lot more than they ever could on r & d, infrastructure, stability, when you do well in health care, especially if you are a
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crowd-based company, i need to be 34u67 more intensively protected of privacy and information that all of your clients would be if it was just their information alone. now connecting into the mothership to these 40 million patient records on athena net, we need that extra investment. it will pay off in spades overtime. >> let me ask you this, you have a question on facebook, like other people, tell us what you want to know about athe nevadai got this question. all this tech knowledge, it's from facebookment all of this technology is actually causing health care professionals to spend less face time with patients. are you seeing that? are we decreasing our qual of care in order to save cost? >> so, first of all, who knew that facebook would be wise? yes, facebook, you are absolutely right. medical records, especially now the federal government mandates what has to be in them and the codes have to match with what's in them in the doctor's bill recrates reams and reams of crap
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that doctors don't care and for the treatment for the patient. what is needed like a cloud-service athena, we are in the background running it with the doctor. it's not mr soft waiver. you can't buy it and run it yourself. we read your factions. we read your results. we do your do you meanation in the background. we can bury the pure record-keeping stuff out of the exam room view so the doctor can truly see actually kind of a tweet on what's really important before talking to a patient. so they can actually devote their presence and attention to the bloody parent, which is the whole thing that these guys want. doctors should get more presence as a result of technology, not less. we think we've got, we'll give you one small example, later this year at hymocrates, we are will relows hipa secure texting. if they want to ask a quick
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question to a specialist, they know about a patient they're zay seeing. this will preven at that time patient from getting routed to a specialist. it will make things go quickly, still be secure and won't involve the passing of this 80,000 page chart back and forth between offices on a fax machine. that's one of the million things we're doing to answer your facebook guy's question, which is absolutely spot-on. >> last question about shareholders, wells fargo reports it likes your stock. worried about gross margins. a little light. operating expenses can be big. obviously worried about doctors not signed up enough. these are transitory problems is what i'm hearing you say? >> absolutely. some of them are purposefully problems, so gross margin, when 4áa lot of dproes margi the first thing we do is take half of that, stek it back into theselves. every year, we got to be re-envengt all five of these service, take the service as it is, take some of that margin, say, doc, now our service will do this extra stuff for you at
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no extra cost with you so you can get more time with your patient. they like, they stay loyal. our attrition rate is less than 7 every 84. they grow near business, sense we are paid a percentage of tear revenue, that grows us as well. so part of the gross margin thing is we start, we buy these thorny tired manual process, we automate them over time. as we succeed, we go start new once, take on more natural processes. so you always see kind of two steps forward, one step backward on our gross mar jirngs but you will always see us staying on the edge of relevance. >> exlevenlt jonathan bush the president and ceo after athena health. thank you for coming on this show. >> it's an honor. >> thank you. you heard mr. bush, here's the thing. these are high multiple expensive stocks. they have tremendous growth. remember this is another 30% grower. if you like high growth, are you getting it at discount rye i now. should matter to a lot of people. mad money is back after this break. coming up, prime time?
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from real estate to utilities, the stocks that had been a haven for dividend investors have been getting hit by fed concerns. the recent pullpack pie have you eyeing a buy. but buffer make your move, find out what cramer has been eyeing in tonight's edition of "off the charts." later, cramer is outraged. he has taken note of home activities that can put home gamers at risk. tonight, he's out to protect your portfolio, stick around to find out what's making cramer so mad, all coming up on "mad money."
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>>ed in mitst of this brutal pulverizing sell-off, a huge part of this decline is the bond yield is rising. i have been telling you over and over again owning bonds right here is one of the most ricky and reckless things you could possibly do. at the same time the people that consider bond alternatives, high yielders, like utility, real estate investment trusts, they're pulling back hard after months of rallying almost nonstop. lysle like i have been saying, as long as interest rates keep rising, these high yield interest rates keep getting pounded, at the lower level i
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think the dividends will also protect the company stocks. so, in other words, as long as the trades go up. the stocks will go down until the yield is so big, we will use them as protection like a trampoline. we're not there yet. tonight, we're off the carts with tim colin, my colleague at "real," he'll be appearing at the conference. we'd love to see you there. we will look at what colins will give us as a more empirical look in the decline of the high yielding cohort, specifically utility, the real estate investment trust and the consumer staples. that's where people have been hiding. last night i had the .2, that's where people are hiding for capital preservation. even those these groups have come down hard as you see, collins is adamant, at least based on what's happening in the charts, first, let's start with the highest yielding group. that's the utility, okay? as exemplified by the utility
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sector spyder etf, we will use this xlu. it's a very common stock people trade all the time. col lips points out the utilitys etf just completed a head and shoulders pattern that has hammered the group. remember, head and shoulders is not about shampoo. it's one of the newscastiest bearish formations in the book. thanks to this the xlu has been on a straight path lower. in short, colins thinks that this is like a falling knife. here's something bizarre he pointed out that frankly cause med to pause, colins does not want the utility etf to stabilize at these levels. in fact, he thinks that itself the worst thing that can happen for a bull t. reason, because if xlu spends the next week and a half consolidating the 37 to 38 level, all that will do is form the right shoulder of a much bigger, much more bearish head and shoulders pattern that can
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send the utility index down to $33.75, roughly $3.50 lower than it is right now. that's a monumental move, people. even though the xlu has fallen 10% from its highest, colin says you need stay away from this group for the next week or two to see how it shakes out, if you gaet bigger shedd head and shoulders this is kind of like the bigger they are, the harder they fall. next up let's look at the chart of the iyr. this is the dow jones real estate detf. it cap cures the action in the real estate trusts we talk about so much. maybe too much. col len says this group is the most oversold of the bunch. the action here has been hideous. these are down 11% in a matter of weeks. i went through these charts this weekend, i went, you got to be kidding. they are so hard hi, there are some signs in this chart the leads as we call them could be finding a bottom at the 67.50,
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67 area. the relative strength index at the top of the chart has reached oversold levels as the statistics at that time bottom of the chart, a way to measure if it has moved too far, too past. but colins points out that, hmm, things can remain oversold for a lot longer than people realize as we foe from 2007 to 2009 in march. it doesn't mean aware isn't due for a bounce, despite the support lines in the cart, if you are buying the real estate trusts here, you are trying to pick a bottom. colins doesn't like that. he says, that's a lost loser's game. this is another falk knife. you don't try to catch those. you exercise patients. you wait for them to go lower so it doesn't get cut. colins doesn't trust i. now, why don't we do this? let's take a look at iyr's weekly chart. you can see the real estate investment trusts from this picture is very different, right?
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you can see, they have much further to fall. the recent drop is only a 40% retracement from the start of 2012's breakout. okay. there's the breakout started there. why does that matter? a lot of traders use the ratio's to guide the decisions. if the iyr closes below 68 at the end of the week, that will tell the followers this level is not holding and that could send the etf real estate investment trust to 64, which coincides with another key tracement level. in short, these levels, they're nothing short of precarious. at left best, come lynn, you need to see why the iyr is standing, more biassed towards the sell. last up, maybe the best of these, the consumer staples. we are using the xlp to monitor those. the xlp of the three high yielding sectors, you know what, this is the best. colins says these staples are
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the strongest group. that's not saying much t. big pullback came after a failed breakout, which has become a dreaded double top formation, which if you look closely, it is right here, okay. kind of looks like a camel, a double camel butt. that's what people, when you see this, people really freak out t. relative strength index at the top. they have broken down harder and the xlp. that's because the staples aren't done going down. in the lost chart in the iyr, you may be able to get a bounce. the risk reward is no good. if it close ace bof $45.70, collins says you might consider buying it. you have to wait for the ceiling to pen trachlt on the other hand, if the xlp closes below 40 it's only a few cents above that level, now it would be worse. if it goes to 39.50, colins thinks the buyers will be going for the exits. the technicians do not like to buy low and sell high. they like to sell here, even though they might have bought
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here, because they think it's going to go down like this. there is a lot of air under the $40 level. no important support levels, just lots of room for the xlp to go into freefall. yeah, saw that chart. i hated i. what about individual stocks? that's what we do on this show. we are about trying to buy the best stocks in the etf. the best way to physical out if these are safe to buy is look at the actual yields. the strael estate investment trusts the yields are moving together regardless of what we're talking about. when that's the case, you want to go with the best of breed. colins says there is huge report for ventast. stock only needs to decline 3% to get there t. stock is incredible how much it's fallen. col lens think us you can buy the domino. these i think are getting interesting. what about the utilities?
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if duke energy can get to a 4.27% yield, it's not from the raising of distribution it will be because it plummets, colins says it's a buy. that's a big move for a utility. he thinks conedison would support a 4.5 morris-year-old. as hard as the utilities have fallen, the charts interpreted by tim colins are like mr. t in that third "rocky" movie iconic. it's for more pain. colins thinks you should get more high quality stuff. i agree with him. that's still aways from where we bryant i would much rather be a serial then a buyer at these levels for many of these stocks because we're just not there yet. frank in new york. frank! >> caller: yeah, jim, thanks for all you do for us guys. thanks for your integrity. >> thank you. >> caller: i'm 59, i'm retired. i bought a couple stocks over a year ago agnc, anna lee and
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hatteras. hts, they are probably nice dividends, should i be concerned interest price are goingdown up and they're going down. >> as long as you accept the fact the dividends may have to be cut. are you getting outsized drift distributions here. anc is yielding 19% right now. that's probably unsustainable. we would could that a red flag, meaning it can't be holding up. if you can hand him the price risk that will come when they cut the dividend. credit suisse suggested it could be happening to one of these. i think it could be happening to everyone. don in california. >> caller: hey, professor cramer. how are you? >> pretty good, how are you? >> caller: i was wondering with bond yields going up. my stock is walgreens. i have taken some off the table. it's running pretty good. should i take more off and wait for a better entry point or let it run? >> i saw this stock hold up.
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it reminded me of stonewall jackson. i'm not kidding you i can't believe how well, it held up. cvs held up well. i don't like to sell a market. that the stock that goes up. done you sell a share, it's doing too well. nothing is always safe in this market t. higher yielders have fallen. i got to tell you, they could continue to fall. i'd be a sell fer we get any lift, not a buyer. we are just not there yet. stay with cramer.
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[ music playing ] it is time, it is time for the lightning round! i tell you whether to buy, buy, buy, or sell, sell, sell, when you hear this sound, then the lightning round is over. are you ready, skeedaddy? phil in north clone. >> caller: hey, jim, how are you doing? it's phil from north carolina. i want to ask you about first interstate bank. you recommended it a while ago.
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i did home on it. i bought it eight 16, it's 20 now. today everybody took a beating. it stood its ground. >> the kind of stock i am looking to buy here, sir. you are in good shape. that's precisely the stock that does better in an improving housing market. i do not think that rates are done judge. that's god for these guys. let's go to stephen in florida. >> caller: boo-yah from the sunshine state. >> i like that, sunshine, what's up? >> caller: i was wanting to ask you about 8 by 8 stock ticker. >> juniper thinks it's good. 8 is a little speculative. you can lose money on those little stocks. sonia in florida, please. >> caller: bbb-boo-yah from the sunshine state, home of the florida gators. >> i love the gators the noles, the canes, international. go ahead. what's up.
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fiu. we like you. >> caller: my question is in regard to amgen. i know you talked about farm farm pharmaceuticals, thank you so much. amgen has dropped since i bought it. >> this is a tough one, it has not been one of our favorite, we like regeneron, celgene, gilead, biogen. we talked about that this week a. conference i am in on friday and saturday, but this group is good to buy into weakness but amgen has not been one of our fates on "mad money." jeff in connecticut. >>. >> caller: boo-yah from kechl, jim. >> we had a guy here kyle from connecticut. he roots for the endian, i don't get that, what's up? >> caller: i was looking at ford motor company, what are you saying, buy, sell? >> i say this is a good one, my charitable trust, people will say, wait a sec, bad head and
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shoulders information coming. i think ford is inexpensive, i'm buy out the way down. let's go to mark in new jersey. >> caller: booia jim, how are you doing? >> real good. how about you? >> oh, i'm doing excellent here in jersey. >> go ahead. >> caller: okay. utilities always have a great yield, i like great yields. what's your view on national grid? >> i think national grid is cheap. i like the utilities are getting down to my sweet spot. i think can you buy some national grid here. it's not as high quality. same with first energy, they are trying to bottom very badly here. i bless national grid. i believe that yield is safe. i know that's taking your life in your hands these days. i saw an oil trust break down today because it did cut its distribution. i think we're okay. how about donna in texas? donna? >> you sweet honey baby. i am from houston in the energy corridor area.
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and i would like to ask you about clean energy, clne. >> first of all, thank you for those kind words, donna, that is a very speculative stock. i think the natural gas players are not where you want to be in terms of the safety of the market. let that come in. i like the mission. it is a very speculative stock. that, ladies and gentlemen, is the conclusion of the lightning round. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪
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>> those games game of thrones people may be on to something. game of throwns is medieval important. anyway, today we had a red day ourselves, it wasn't pretty. sell, sell, sell, which is why wednesday is one of my favorite days. i get to focus on the key investing role, so don't you end up seeing red. we will take a few minutes to put your picks to the test in my favorite game, that's "am i
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diversified?" this is incredibly useful, as you saw from our off the charts, stocks of a feather form together even if they are different in real life. this is where you call me and tweet me at jim cramer. i tell you if your portfolio is diversified. let start with a tweet from@wetalk who tweets@jim cramer, of course, thank you for all the lesson, am i diversified? banc of america, face booj, toll brother, mm brothers trust and wgo, winnebago. thank you again. all right, toll brothers is housing. bank of america is a bank. my charitable trust owns it. winnebago is let's call it an auto, auto-related. pt is a terrific real estate investment trust, a housing, a bank, social media and auto-related. that's perfect. is diversification even as that
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portfolio has been hurt badly. let's go to alex in georgia. >> caller: hey, jim, how is it going? >> really good. how are you? >> caller: it's been rough the last holidays, so my top five holdings right now are beam, costco, home depot, sales and key bank. >> all right. let me take over from there. oh, boy, we got a problem here. first sales lissp, a bunch of guys upgraded. it is a high vocal stock. people don't like those, call eight tech. costco, charitable trust owns that, a great retailer, boem is thelicker company, ground foreman reported good numbers. home depot, here's the problem. home depot and costco. can't stand. worry going to make a change, about to sell home depot, no
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offense, he's a terrific ceo. let pick up, united health did a big buyback today. would be a nice addition to this portfolio. stick stick with cramer. coming up, he's still mad. cramer spotted some stockmarket tricks he's not too fond of, especially within they can put your cash at risk and tonight, he's sounding off. don't go anywhere.
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you got to be kidding me? that was my reaction today when i opened up the "wall street journal" and saw the story headline one of wall street's riskiest bets returns, about the return of synthetic collateralized debt obligations or dcdos. you may not know what these piece of papers are, ar cane, ob truce. they are difficult to understand financial epg near bogs that are created to meet the demand from fun managers trying to reach for yield, always a dumb thing, in order to get a return for investors. however in the peak year 2007 when housing was about to plummet in value t. journal reminds us $630 billion of mother-in-law cdos were created. they were at the heart of the financial fallout that led to the great recession because so many of them defaulted. the article claims investors are demanding tease ricky pieces of paper, no doubt they can borrow
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money, buy tease synthetic bonds and magnify the returns. you can slice and dice them in a regular mortgage, get a bigger yield. we wouldn't be able to have a functioning mortgage mark without it. as my colleague pointed out on "squawk on the street," they are risky bets on housing, made riskier by the amount of leverage the funds use to juice the returns. i totally get it win sophisticated investors tend to get more reward with risks. . last time around, these pieces of paper had so much risk, when housing went sour, they not only wiped out investors, they insured the synthetic paper, old aig, the insurers themselves include bear sterns and leman brothers. they should ban them outright as they were the contributors to the near downfall of our system. the defenders will say the underlying mortgages are in much
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better shape than they were back then. hey, you know what, believe me, i heard the exact same argument from bayer and countrywide. >> boo. >> who assured me there could not be a huge am of people defaulting on emergency right? they were dead wrong. they will say there are terrific ways to get juice on return for their investors over all fixed returns. these institutions will sell them to both the smart money and so-called dumb money, less sophisticated investors who don't know better and the lateral will be destroyed by them like lasted time. in the interim, the sales people right now are supposed to be meeting the demand from these issue youers will force feed this from everybody that can take them down. they used to call this jamming, meaning fixed income brokers jammed to unsuspecting customers with pieces of paper that seem safe were blessed foolishly by the rating agencies which were paid for by the issue youers.
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natural jamming allowed the sales people to make for kuns in bonuses. the reason they can jam the customers is cdos are structured products. i are a terrific way to rip off customers because gigantic fees are embedded into the instruments. they can jam their clients and not worry how they fair because the fees are so big, after you sold a few you can make millions of dollars, move to another firm with new accountability for this destruction you just brochlt that's exactly what happened last nooim time. the government has to wiesz wise up right now and stop this financial engineering before it gets out of hand all over again, until uncle sam does something, i'm on a mix, people, a mission to shame all those who sell these pieces of paper and to warn those who might be tempted to boy them. we node to stop from travesty before we have a financial
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apocalypse. i would love it if the government will step in. if i can steer a few people away from the synthetic cdos, i'll consider it a job well done. stay with cramer. i believe the correction in u.s. and japan should be bought, not sold. will 20 doping baseball players miss 100 games? and it looks like the jobs number will be lower on friday. all that on "the kudlow report" next up. he can focus on his recovery. he doesn't have to worry so much about his mortgage, .
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what can turn things around for the bold? an oversold rally. that's what the bulls have to work for. bum marks i promise to find for you right here on "mad money." i am jim cramer and i will see you tomorrow! in your face, that's right, even some democrats are saying that about president obama's decision to make u.n. ambassador susan rice his new national security adviser. yeah. susan rice, the same one who kept saying the youtube video actually caused the benghazi attack even after everybody knew that was false. guess what, congress has no say in her appointment. on wall street, meanwhile, investors suffering through the long-awaited correction, it includes the japanese sell-off and some unimpressive economic numbers. so the dow falls 217 points, for what it's


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